Money machines – F1's mind-boggling budgets

Formula One cars do not just run on high-octane fuel, they consume vast amounts of cash, too. PETER McKAY looks at the stupendous budgets involved.

10 March 2002Peter McKay

When Mark Webber crossed the line in fifth place in the Australian Grand Prix last Sunday there was, rightly, much celebration within the Minardi team over his two championship points.

Do the sums: in the fiscal language of Formula One, US dollars, those two points cost Minardi $4.9 million ($9.5 million; its annual budget divided by 17, the number of races in the championship).

But Webber's point-scoring afternoon will bring many millions more to the team in guaranteed television and travel bonuses from F1's ringmaster, Bernie Ecclestone. The money will be seen next season.

In the secret society of F1, no-one knows exactly the value of those two points, but a ballpark $US13 million ($25 million) would be a good guess. And other sponsors are likely to be attracted by the Minardi success, perhaps the most popular fifth place in F1 history.

Grand Prix racing is fuelled by money, and F1's finances are again in the spotlight as teams head to Kuala Lumpur for next weekend's race.

Last week, the UK car magnate and Arrows team owner, Tom Walkinshaw, and partner Charles Nickerson bought the bankrupt Prost F1 team for just 2 million ($5.5 million), believing it entitled them to a place on the grid ? and the French team's travel and TV money from 2001.

Ecclestone quashed their hopes. Under the agreement that governs F1, any new team has to lodge a bond of $US48 million with the ruling body.

F1 is a cut-throat business in sporting livery. The rich tend to get richer, and the weak struggle to survive.

World champion team Ferrari this season will spend more than $US302 million, F1's biggest budget.

Minardi, owned by hard-working Australian Paul Stoddart, has a "mere" $US83 million in cash, kind and support to get through 2002, according to F1 budgets published in Ecclestone's EuroBusiness magazine.

Anywhere else but in F1, 83 million greenbacks would be an enormous pile of money with which to go racing. Top local V8 Supercar teams get by on three million, Aussie dollars at that. Stoddart, who has worked a minor miracle, reckons another $US50 million would be useful.

Minardi's money tree doesn't look nearly as bountiful when the $US35 million worth of free engines from Asiatech is ignored, along with owner Stoddart's own contribution of air travel and freight to the value of $US4 million through his European Aviation business.

The biggest single injectors of cash are Malaysian ? the big M and prominent KL signs on the black Minardis' flanks show the involvement of gaming giant Magnum Corporation ($US11 million) and, nominally, the city of Kuala Lumpur. There are many Malaysian backers.

The Malaysian government, Stoddart says, "has not spent a penny of taxpayers' money, yet it has given us what we need [introducing] us to key corporations in Malaysia who have paid for the KL promotion. Governments shouldn't have to invest directly in motorsport."

Local sponsor Telstra has contributed $US2 million, says EuroBusiness. For this, it gets a sticker on Webber's helmet and a badge on his race suit, and access to Stoddart's fleet of two-seater F1 cars. Another Australian sponsor is Healthyco, a maker of food bars.

Other local sponsors soon could be involved; prominent bizoids were spotted in the Minardi pit last weekend.

"In that one race," Stoddart says, "we achieved the whole season's goal of scoring a couple of points and getting ... into the top 10."

As he has famously observed, teams like Ferrari don't have budgets. He was suggesting that top teams like Ferrari tend to get as much money as they need to win. Ferrari's parent company, Fiat, is willing and able to top up the pot.

Ferrari's principal backer is again Phillip Morris, whose Marlboro brand adorns the side of those red flying billboards, contributing an estimated $US87 million this year.

Michael Schumacher's $US32 million salary is one major expense; Rubens Barrichello gets somewhat less at $US5.5 million.

For the first time in many seasons, Minardi is not the pauper of pitlane. The wooden spoon goes to Walkinshaw's Arrows team, with $US50 million. Ridiculously, this is regarded as tea money in F1.

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